Goldman Sachs’ Peter Callahan breaks down the Nasdaq-100’s explosive 4-day V-shaped rally

The Nasdaq-100 just pulled off the kind of move that makes portfolio managers spill their coffee. A gain of approximately 945 basis points, roughly 9.45%, in just four trading days. That’s a V-shaped recovery sharp enough to give whiplash to anyone who sold the dip too early. Peter Callahan, a Goldman Sachs veteran of roughly 20 years who specializes in the Technology, Media, and Telecommunications sector, laid out the mechanics behind the rally. His analysis points to four converging forces: improved technicals, cleaner positioning, better valuations, and stronger fundamentals. In English: the charts looked ready for a bounce, too many traders had already exited, prices had gotten cheap enough to attract buyers, and the actual business numbers backed it all up. What drove the snap-back Positioning played an equally important role. When too many market participants are already short or underweight a sector, it doesn’t take much good news to trigger a squeeze. The reduction in what Callahan describes as positioning overhang meant there was less selling pressure overhead and more fuel for any upward move. Valuations had also become more attractive after the preceding drawdown. Large-...